About Me

Thursday, 23 August 2012

Feeding Frenzy

While the
world is transfixed by the bare faced cheek of Harry von Hosenrunter there are
a few things going on. Not least is
Tropical Storm and potential Hurricane Isaac heading for the scheduled
Republican Convention in Tampa,
Florida. That the storm in question should have such a
name, both of the Bible and the Qur’an ought to give us all pause for thought.

To add to
the joy of all doom mongers there is another storm following on across the
Atlantic which at the moment could be heading for Massachusetts, where Mitt Romney was
formerly Governor. Isaac could well give
the Caymans a bashing where much of Romney’s money went. Is someone trying to tell us something?

There are
other matters as well. In Russia there is
the question of whether there will be any grain exported at all this year. This is happening at the same time as grain
shortages could occur in the US and a high proportion of that harvested may
well have to be turned into ethanol to help keep gas (petrol) prices down.

In the UK weather conditions
and other problems, notably a major reduction in the bee population could
seriously deplete food production. In
any case the dire effects of the combination between the EU agriculture
requirements and supermarket pricing are putting many UK farmers and farms at serious
risk.

As for
Europe, if the Euro collapses or its complications result in major economic
contraction this will impact on agriculture just as much as any other sector
especially as the agriculture budget is the big beast of Brussels.

In Australia it is
now argued that the mining boom has topped and it is possible some retrenchment
may occur. One reason amongst many is
that production in China
may not be expanding but at best might be relatively static. One could go around the world and find a
distinct shortage of good news.

The recent
row over the news that some at Glencore, one of the world’s major trading and
finance corporations sees food shortages as good for commodity and other
traders is provoking strong reactions.
There is the inevitable argument that speculation helps to modify price
swings as opposed to exacerbating problems.

This will
depend on what speculation, how this is translated into distribution at what
range of prices and who finishes up with most of the loot. Given recent history there is every prospect
of the market and prices being rigged in favour of the few and their political
friends. This is not the same as open
market and pure speculation by large numbers of independent operators.

What we all
ought to be worried about is if there may be a world wide category shift in the
price of food on a permanent basis. That
is, it is going to be much more expensive in the stores and some foods may rise
more sharply in price than the average.
If such foods are those which are part of the basic diets of many people
this means trouble.

It will be
politically, economically, socially and internationally big trouble. I can recall the time when food took a much
higher proportion out of family budgets than at present and that in a world of
tight margins for the majority of people.

But then
there wasn’t much debt around because for most ordinary people credit was hard
to come by. In the financial world there
was nothing remotely like the leverages common today either in trading or in
ordinary banking. So a major upward in
price shift in basic budgets will hit all the harder.

Perhaps we
should all start praying whatever our beliefs may happen to be.